project on account payable

7/30/2019 Project on Account Payable

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Sri Sharada Institute of Indian

Management-Research

7, Institutional Area, Phase-II,

Vasant Kunj, New Delhi 70

Website: www.srisiim.org

SUMMERINTERNSHIP

PROJECTREPORTON

ACCOUNT PAYABLE &

FIXED ASSETS

PUNEET (20110112)

PGDM (2011-13)

FACULTY GUIDE: INDUSTRIAL GUIDE:

Mr. SSAANNJJEEEEVVSSAARREEEENN Mr. DEEEEPPAAKKGGHHOOSSHH

(Head of Cooperate accounts)


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ACCOUNT PAYABLE AND FIXED ASSETS Page 2

Sri Sharada Institute of Indian Management-Research

7, Institutional Area, Phase-II, Vasant Kunj, New Delhi 70

Website: www.srisiim.org

SUMMERINTERNSHIP PROJECT REPORT ON

ACCOUNT PAYABLE & FIXED ASSETS

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF

POST GRADUATE DIPLOMA IN MANAGEMENT

SESSION 2011-2013

FACULTY GUIDE: INDUSTRIAL GUIDE:

Mr. SSAANNJJEEEEVVSSAARREEEENN Mr. DEEEEPPAAKKGGHHOOSSHH

(Head of Cooperate accounts)

SUBMITTED BY:

PUNEET (20110112)

PGDM (2011-13)


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DECLARATION

I PUNEET student of PGDM (2011-13) hereby declare that I have

completed this project ACCOUNT PAYABLE & FIXED ASSETS.

The information submitted is true to the best of my knowledge.

PUNEET (20110112)


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Table of Content

1. ACKNOWLEDGEMENT . 4

2. EXECUTIVE SUMMARY . 5

3. INTRODUCTION .. 6

4. COMPANYSHISTORY .. 11

5. COMPANY PROFILE . 12

6. CEOMESSAGE . 15

7.NMCPHILOSOPHY . 17

8. RESEARCH METHODOLOGY . 20

9. DOCUMENTS REQUIRED FORACCOUNTS PAYABLE . 23

10.ACCOUNT PAYABLE PROCESS OFNMC . 28

11.FIXED ASSETS CAPITALIZATION PROCEDURE . 34

12.ANALYSIS &PRESENTATION OF DATA AND INTERPRETATION . 36

13.FINDING . 50

14.SUGGESTIONS &RECOMMENDATIONS: . 51

15.CONCLUSION . 52

16.REFERENCES/BIBLIOGRAPHY . 53


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ACKNOWLEDGEMENT

Its a privilege to be associated with NMC Healthcare, one of the mostrespected and dominant business houses in the UAE. This

acknowledgement is not only the means of formality, but to me, it is a way by

which I am getting the opportunity to show the deep sense of gratitude and

obligation to all the people who have provided me with inspiration, guidance and

help during the preparation of the project.

At the very outset, I would like to express my gratitude from bottom of my heart to

MR.RAVEENDRARAI(Vice President) of HR & Personnel for giving me theopportunity to do my Summer Internship Project in this esteemed organization.

I articulate my sincere gratitude to my project guide MR.DEEPAKGHOSHHead of

Coorporate Accounts who has spend his valuable time and guided me throughout

the training process in spite his busy schedule, in shaping of my project.

I owe the enormous intellectual debt towards my

CMDSWAMI (DR.)PARTHASARTHY of SRI SIIM who helped to provide methe opportunity to undergo my Summer Internship Project in NMC Healthcare and

my faculty guide, MR.SANJEEV SAREEN for guiding and helped me in

preceding my project work, which ultimately resulted in successful completion of

the project. But last not the least I am thankful to my parents, friends and all well-

wishers for blessing me for my success.

PUNEET (20110112)


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Executive Summary

This project deals in Account Payable and Fixed Assets at NMC healthcareL.L.C.. Payable Management and Fixed Asset Management is one of the most

important aspects of the organization, as they all deal with the internal management

of the organization. The Accounts payable help to reduce the liabilities of the

companies and sound fixed asset management can lead to a substantial tax savings

in depreciation deductions, poor fixed asset practices can threaten the accuracy of

financial reports, causing re-reporting and negatively impacting the bottom line.

Therefore it needs a careful analysis and proper management.Creditor are the liabilities for the company which company have to pay

as soon as possible in this Accounts payable helps the company to pay

off the creditors. On the other hand Fixed Asset Management helps the

company to put tracking and depreciating fixed asset, which is an

important task for the organization.

With an increasing domestic and international competition, NMC

Healthcare L.L.C is using decent policy, in order to maintain its

premium position, with proper control on Accounts Payable and Fixed

Assets Management.


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INTRODUCTION

LITERATUREREVIEW:-

For Accounts Payable:

What is Account Payable?

Accounts Payable is a means by which you can monitor the disbursement of

money from you company simply put, Accounts payable records and pays a

companys bill or liabilities.

When a liability or debt is incurred, the vendor to whom the money is owed issuesan invoice. The debt or liability is recorded into Account Payable when you enter

the invoice. On the basis of this Account payable, the company is able to pay off all

their liabilities.

The Accounts Payable Cycle

Accounts Payable is normally operated on a monthly accounting cycle. During the

month you enter and post hand checks as they are issued. Then perhaps weekly, bi-weekly or even daily, depending on the volume of invoices you receive, you use the

checks processing cycle to create, print and post machine check payment to your

vendors. At the end of the month, print the monthly reports and balance the

accounts payable subsidiary ledger to your General Ledger. Finally, run the close

month process to close accounts payable for the current month and prepare for the

next months processing.

Reports can be printed and inquiries used to supply information at any time during

the month.


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For Fixed Assets:

Fixed assets are those assets which are required and held permanently

for a pretty longtime in the business and are used for the purpose for

earning profits The successful continuance of the business depends uponthe maintenance of such assets, They are not meant for resale in the

ordinary course of business and the utility of these assets remains so

long as they are in work order, so they are also known as capital assets.

Land and buildings, plant and machinery, motor vans, furniture and

fixtures are some examples of these assets. Financial transactions are

recorded in the books keeping in view the going concern aspect of the

business unit. It is assumed the business unit has a reasonable

expectation of continuing business at a profit for an indefinite period oftime. It will continue to operate in the future. This assumption provides

much of the justification for recording fixed assets at original; cost and

depreciating them in a systematic manner without reference to their

current realizable value.

It is useless to show fixed assets in the balance sheet at their estimated

realizable values if there is no immediate expectation of selling them.

Fixed resale; so they are shown at their book values (i.e. cost less

depreciation provided) and not at their current realizable values. The

market value of a fixed asset may change with the passage of time, but

for accounting purpose it continues to be shown in the books at its bulk

value, i.e., the cost at which it was purchased minus depreciation

provided up to date. The cost concept of accounting depreciation

calculated on the basis of historical costs of old assets is usually lower

than that of those calculated at current value or replacement value. This

result in more profits on paper, which if distributed in full, will lead to

reduction of capital.

NEED FOR VALUATION OF FIXED ASSETS:

Valuation of fixed assets is important in order to have fair measure of

profit or loss and financial position of the concern.


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Fixed assets are meant for use for many years the value of these assets

decreases with their use or with time or for other reasons. A portion of

fixed assets reduced by use is converted into cash though charging

depreciation for correct measurement of income, proper measurement of

depreciation is essential, as depreciation constitutes a part of the totalcost of production.

Learning Objective:

1.Accounts payable: -AP is the short term liabilities that

a business owes to any of the outside companystakeholders.

Accounts payable has a lot of importance when you want to

run yourbusiness successfully.

The first important reason is that if we dont exactly know to

whom we owe what we can be fooled by anyone who can

receive repeated payments from us. This usually happens

with businesses when there are no records maintained or the

amount is so much that it becomes extremely difficult to keep

a lid on things. Not knowing the exact date of the payment ofan account payable will result into accumulation of interest

on your company only because of the negligence.

Accounts payable are also important for maintaining the cash

flows. When you are dealing with mass purchases, you often

can negotiate the terms of your accounts payable.

2.Fixed Assets: -Fixed Assets plays very important role inrelating companys objectives the firms to which capital

investment vested on fixed assets. This fixed asset is not

convertible or not liquid able over a period of time the total

owner funds and long-term liabilities are invested in fixed

assets. Since fixed assets playing dominant role in total
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business the firms has realized the effective utilization of

fixed assets. So ratio contributes very much in analyzing and

evaluating the performance of fixed assets. If firms fixed

assets are idle and not utilized properly it effects long-term

sustainability of the firms, which may affect liquidity andsolvency and profitability positions of the company. The idle

of fixed assets lead a tremendous in financial cost and

intangible cost associate to it. So there is need for the

companies to evaluate fixed assets performance. Comparison

with similar company and comparison with industry

standards. So chose a study to conduct on the fixed assets

analysis of NMC corporate using ratio in comparison with

previous year performance. The title of the project is analysison fixed assets.

Scope of Study:

For Account Payable:-

Validate all Account Payable invoices for the month (this is

ongoing).

Review supplier statements and check all invoices are secondary

approved/or current (i.e. not due for payment).

Review employee expense claims/advances to ensure they are up-to-date and processed.

Review credit card statements to supporting receipts/vouchers and

journal expenditure from the department suspense account to

relevant cost centre.


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Run Invoices on Hold, Report to list invoices placed on hold and

then action all holds, as necessary.

For Fixed assets:

Fixed asset is an asset held with the intention of being used for the

purpose of producing or providing goods or services and is not held for

sale in the normal course of business. Fixed assets often comprise a

significant portion of the total assets of an enterprise, and therefore are

important in the presentation of financial position. Furthermore, the

determination of whether expenditure represents an asset or an expense

can have a material effect on an enterprise's reported results of

operations.

Fixed Assets also need to be capitalized because when it start giving

revenue we have to record it how much a asset is giving the Profit and

how much depreciation we are charging on it.

The project is covered of fixed assets of NMC drawn from annual

reports of the company. The fixed assets considered in the projectare which cannot be converted into cash with one year. Ration

analysis is used for evaluating fixed assets performance of NMC.

The subject matter is limited to fixed assets it analysis and its

performance but not any other areas of accounting corporate,

marketing and financial matters.


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Companys History

NMC Health was founded by H.E. Abdulla Humaid Al-Mazroei and B.

R. Shetty in 1977 as the "New Medical Centre" in Abu Dhabi, and isnow the largest private hospital chain in the UAE.

NMC Healthcare LLC is one of the most respected and dominant

business houses in the UAE, engaged in business sectors ranging from

healthcare, trading (marketing and distribution) and information

technology. Apart from these main business sectors, NMC Healthcare

LLC also has affiliate companies serving business sectors such as

healthcare, financial services, pharmaceutical manufacturing, hospitality,real estate and media.

From a small one room clinic in 1973, NMC Healthcare LLC has

evolved into an integrated healthcare company with a wide network of

hospitals, medical centres, and pharmacies across the UAE. NMC

Healthcare LLC provides a comprehensive range of healthcare services,

supported by experienced medical professionals cutting across various

disciplines, covering the entire gamut of medical diagnosis andtreatment. Over the years, NMC Healthcare LLC has earned reputation

as a world-class medical institution synonymous with genuine care,

concern and commitment.

In 2012 it became listed on the London Stock Exchange.
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Company Profile:

NMC Healthcare

Hospitals Pharmacies Trading Trading InformationHealthcare FMCG Technology

&Education

Specialty HospitalsHospital &

Medical Centers

These are the Branches of NMC which I explain one by one:

1.Hospitals: - In UAE NMC has 5 Hospitals. In which 3 are

Special Hospital and 2 are Hospital and Medical Centres. Those

are:

A)Specialty Hospitals: These are 3 Specialty hospitals

NMC Specialty hospitals Abu Dhabi

NMC Specialty hospitals Dubai

NMC Specialty hospitals Al Ain

B)Hospitals and Medicals Centres: These are 2 Medical centres

New Medical Centre Hospital Dubai New Medical Centre Sharjah


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Pharmacies: In Pharmacies there are 2 sections.

A)Bait Al Shifa

B)New Pharmacy

Trading Healthcare: There are 3 divisions in this.

A)Scientific Division

B)Pharmacy Division

C)Veterinary Division

Trading FMCG and Education: In this there are 3 Division.

1.Food Division

2.Non Food Division

3.Education Division

Information Technology: IT is divided into 3 categories.

1.Healthcare IT

2.Business Application IT

3. Infrastructure


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Vision of NMC Healthcare:

To be the trusted healthcare provider in UAE and abroad driven by

excellence through innovation, Quality, Team Work, advanced

technologies, Patient safety, and customized care offering.

Mission of NMC Healthcare:

To lead the healthcare industry in UAE by providing customized

healthcare solution to different segments of the society.

To provide consistent high quality cost-effective patient care in acompassionate and caring environment.

To achieve high level of customer satisfaction through integrity,

dedication, professionalism, teamwork, and timely service.

To introduce latest technologies in healthcare for better diagnosis

and treatment.


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CEO Message:

At NMC Healthcare, we guarantee personalized care, genuine concern

and a sincere commitment to the overall well-being of the society. We

believe that healthcare is simply not about detecting, diagnosing,

informing or treating an individual but it is about helping people to lead

a wholesome and healthy life. We are committed to serve the

communities where we do business and pledge to provide our customerswith hope - Hope of a Healthy and Happy Life.

As the expression goes, The journey of a thousand miles begins with a

single step, our incredible journey also began with our first step in

1973, when we established a small clinic and pharmacy in Abu Dhabi

under the name New Medical Center (NMC).

During the initial years, NMC, being the first private health care

provider was confronted with many complicated challenges. Instead of

viewing these challenges as setbacks, we perceived them as

Opportunities - Blessings in Disguise, and resolved them successfully

with grit, perseverance, determination, and strength. We attribute our


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success today to the sincerity, hard work and commitment of our staff,which have helped us to grow and prosper over the years.

We believe in the policy of providing healthcare to all sections of the

society while upholding ethical medical practices and discouragingmalpractices. Our customers are assured of receiving personalized care

in a compassionate and friendly environment under highest standards of

quality at affordable charges. These founding principles continue to

guide and motivate us everyday as we aspire to become the leadinghealthcare brand in the region.

Continuing with our mission to provide advanced healthcare services to

all the customers, we are also keen to explore new business

opportunities with like-minded partners in the UAE and abroad. With

the sustained patronage of customers and Almightys Blessings, we are

confident of addressing emerging opportunities and achieving more

milestones in the years ahead.

Our corporate motto Together We Smile has its origins rooted in our

resolute belief to make a positive change in the lives of people whom

our service touches and bring smiles to all. Lets together cross lifes

miles with a smile.


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NMC Philosophy:

One of the strategic objectives of NMC Healthcare is to position itself as

a Pan-UAE healthcare player through a network of specialty hospitals,medical centres, day-care centres, clinics, and pharmacies in different

Emirates to provide high quality, reliable, and cost effective medical

services in accordance with global standards of excellence.

Adhering to the policy of providing healthcare to all sections of the

society.

Upholding ethical medical practices and discouraging malpractice.

Providing customized care in a compassionate and friendly manner.

Maintaining highest standards of quality and affordable servicecharges.

NMC Healthcare has been successful in creating a work culture that

attracts and retains highly skilled and specialized medical professionals

from different parts of the world. All medical professionals are carefully

selected through rigorous recruitment processes and ongoing training

programs and are mandated to undergo periodic training programs and

workshops to upgrade their skills. Over the decades, NMC Healthcarehas earned a reputation as employer of choice in the market as evident

from a long list of employees serving for decades as well as the

continuing trend of several family members preferring to work in the

company.

Critical Success FactorsThe key factors that facilitate NMC Healthcare to deliver quality careand attain the status of being the premier healthcare institution are:

Employing skilled doctors and paramedics with sound educational

background, proven work experience, polite behavior, and caring

nature.


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Emphasizing capacity building in medical diagnostics (laboratory and

radiology) by incorporating advanced equipment, cutting-edge

technologies, and highly skilled medical professionals.

Imbibing widely accepted quality standards such as those prescribed by

Joint Commission International (JCI) and International Organization for

Standardization (ISO) 9001.

Creating a sophisticated technology infrastructure to deliver seamless

healthcare services through Wipro Hospital Information System (HIS)

and Oracle Enterprise Resource Planning (ERP).

Improving services processes continuously and introducing new

services in a timely manner.

Cultivating harmonious working relationships with federal and local

regulatory authorities, insurance companies, government entities, and

local communities.

Establishing seamless referral systems for advance treatment within

and outside the NMC Healthcare network through affiliations withreputed healthcare institutions around the world.

Serving a diverse pool of patients transcending nationality and income

levels.

Catering to the requirements of all insurance companies and third party

administrators (TPAs) with customized IT solutions.

Adhering to corporate governance and sound management practices.


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NMC Healthcare strives to continuously improve healthcare in the UAE

and shares the vision of the Government of UAE to position the country

as a world-class quality healthcare destination.


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RESEARCH METHODOLOGY

1.Research objective: -

Account payable:

My objective is to find out a short-term liquidity measure

used to quantify the rate at which a company pays off its

suppliers. Accounts payable turnover ratio is calculated by taking

the total purchases made from suppliers and dividing it by the

average accounts payable amount during the same period.

Accounts Payable Turnover=

The measure shows investors how many times per period the

company pays its average payable amount.

Fixed Assets:

The study is conducted to evaluate fixed assets performance ofNMC.

The study is conducted to evaluate the fixed assets turnover of

NMC.

The study is made to known the amount of capital expenditure

made by the company during study period.

The study is conducted to evaluate depreciation and method of

depreciation adopted by NMC.

The study is conducted to known the amount of finance made by

long-term liabilities and owner funds towards fixed assets.


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Study is conducted to evaluate that if fixed assets are liquidated.

What is the proportion of fixed assets amount will contribute for

payment of owner fund and long term liabilities.

The study is evaluate is giving adequate returns to the company.

2.Research Methodology:-

Both for FIXED ASSETS and ACCOUNT PAYABLE:

The data used for analysis and interpretation form annual reports of thecompany that is secondary forms of data. Ratio analysis is used for

calculation on purpose.

The project is presented by using tables graphs and with their

interpretations. No survey is undertaken or observation study is

conducted in evaluating FIXED ASSETS and ACCOUNT PAYABLE

performance of NMC.

3.Limitations:-

Both for FIXED ASSETS and ACCOUNT PAYABLE:

The study period of 42 days as prescribed by university.

The study is limited unto the date and information provided by

NMC and its annual reports.

The report will not provide exact fixed assets status and position in

NMC; it may vary from time to time and situation to situation.


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This report is not helpful in investing in NMC either through

disinvestments or capital market.

The accounting procedure and other accounting principles are

limited by the company changes in them may vary the fixed assetsperformance.


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DOCUMENTS REQUIRED FORACCOUNTS PAYABLE

1. INVOICE

2.PURCHASE ORDER

3.GRIN(GOODS RECEIVED AND INSPECTIONNOTE)

4.GRN(GOODS RECEIVEDNOTE)


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1. INVOICE


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2.PO(PURCHASE ORDER)


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3.GRIN(GOODS RECEIVED AND INSPECTIONNOTE)


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4.GRN(GOODS RECEIVEDNOTE)


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ACCOUNT PAYABLE PROCESS OF NMC

Accounts Payables is nothing but a Liability which has to be paid by the

company for the goods that they have purchased or services that theyhave availed from a Vendor. The Firm is Accountable or responsible to

pay for the goods purchased or services that they have availed.

Accounts payable best practices in controlling accounts payable with the

intention of contributing positively to cash flow and bearing jointly

beneficial relationships with suppliers. The hope between a company

and its suppliers seems to be shaken by accounts payable actions there

by upsetting supplier relations. On the other hand, paying your bills on

time improves your relationship with the supplier. An improved

relationship with suppliers is essential to a company since they supply

priceless trade credit, and also offer ideas for new methods and products,

which are considered as important role in customer service.

As NMC follows centralized Accounting, which is why Payable is also

centralized in NMC healthcare. So, the procedure is different from other

companies.

The procedure of Accounts Payable in NMC is as follows:

a)Collecting invoices from all section

b)Checking

c) the accuracy of invoices with GRN, PO and also the approval of

the H.O.D

d)Preparing files for processed and un paid invoices for necessary

accounting

e)Writing accounts heads in each invoices


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f) Arranging invoices alphabetically and put Document Numbers

g)Entering the bills in to computer and checking all the invoices

accounted as correct or not.

h)Copies of invoices generated in H.O sending to various affiliates

i) Preparing payment advices for each suppliers

j) Party reconciliation

k)Proper filing of invoices

l) Checking of GRN list monthly to ensure all the purchase are

entered

m)Proper Bill matching with payment vouchers

n)Preparing monthly expenses details for Trading & Reliance

COLLECTING INVOICES FROM ALL SECTION:In this step Accounts payable department collect all the

invoices from various branches of NMC Healthcare. The document

which I show is of Al Ain branch.

CHECKING THE ACCURACY OF INVOICES WITH GRN,PO AND

ALSO THE APPROVAL OF THE H.O.D:In this step employee check the accuracy of GRN and PO

that the amount which GRN and PO is showing is correct and matched


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or not. There is one more document is required that is Approval of Head

of Department (H.O.D).

PREPARING FILES FORPROCESSED AND UN PAID INVOICES

FOR NECESSARY ACCOUNTING:In this step the employee makes an separate file for the

processed and unpaid invoices. After that, they do proper accounting

treatment for it.

WRITING ACCOUNTS HEADS IN EACH INVOICES:In this step employee put every transaction in their prescribed

Accounting head.

ARRANGING INVOICES ALPHABETICALLY AND PUT

DOCUMENT NUMBERS:In this step employee put the entire document in the

alphabetical order and also put the document numbers on every Invoice.

This helps the employee to find the invoice whenever they need it.

ENTERING THE BILLS IN TO COMPUTER AND CHECKING ALL

THE INVOICES ACCOUNTED AS CORRECT ORNOT:After all the above steps, in this step the employee put all the

invoice transaction in the computer in their respective accounting head.

After that they have to check that the entire amount which you

accounted is correct or not.

COPIES OF INVOICES GENERATED IN H.O SENDING TO

VARIOUS AFFILIATES:In this step all the invoices were sent to all the different

branches of NMC healthcare. In which they cross check all the data that

all those data is accounted correctly. This step is done because this

company follows the centralized control.


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PREPARING PAYMENT ADVICES FOR EACH SUPPLIER:In this step H.O employee makes the payment advice in

Excel sheet. Accordingly, they pay their debt to their suppliers. Actually

it is a Statement on which the Account payable employee gives advice to

the company on how much amount they have to pay to whom.

PARTY RECONCILIATION:

In this part account payable made the suppliersreconciliation. In this they make tally their account with the supplier

account or if there is any omission then that value comes under the

Reconciliation Account.

PROPERFILING OF INVOICES:After the reconciliation next step is to make a proper filing of

all the invoices because in reconciliation we record those values which isnot appear in the supplier or NMC statement. After payment of those

omitted values proper filing is mandatory.

CHECKING OF GRN LIST MONTHLY TO ENSURE ALL THE

PURCHASE ARE ENTERED:Now, in this step monthly list of GRN is checked with the

Books of NMC by the Employee to know there is no omission or wrongentry.

PROPERBILL MATCHING WITH PAYMENT VOUCHERS:


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In this step the employee have to match the entire bill with

the payment vouchers.

PREPARING MONTHLY EXPENSES DETAILS FORTRADING &

RELIANCE:This is the last step of Account payable procedure, in this the

Account payable employee prepares the detail monthly expenses which

is done by the trading and Reliance Department.


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Invoice sent

to H.O

DIAGRAM FOR ACCOUNTS PAYABLE

No

Yes

No

Yes

1st QC (Whether

all invoices

belong to related

Sent wrong

invoices to

validator

Segregate and saveinvoices in specific folder

for required validation

Invoices approved by validator

(with expense account number

and cost center)

Book invoice inaccounting software

according to validation

Invoice is

approved forpayment

Make Payment by using approved

bank account

2n

QC*

(Invoices

saved must beequal to

invoices

3rd QC*

(Accountnumber and cost

center must besame as given by

validator)


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QC* = Quality Check

FIXED ASSETS CAPITALIZATION PROCEDURE

1.Budget for capital Expenditure

2. Identify the suppliers

3.Select quotation

4.Raise PO to the lowest quotation

5.Receive the Item/ Install

6.Once commissioned then capitalized

7.Charge depreciation

BUDGET FORCAPITAL EXPENDITURE:It is the first step in fixed assets capitalization, in which we

make the Budget for capital expenditure. In this budget we estimate how

much that asset cost to the company and how much we pay for that fixed

asset.

IDENTIFY THE SUPPLIERS:After estimating the budget, now we proceed to inviting the

suppliers to whom we purchase the assets. There are lots of suppliers

with their quotations but at different prices.

Change status to

Complete


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SELECT QUOTATION:Now, after getting the quotation, company selects the best

price from those quotations.

RAISE PO TO THE LOWEST QUOTATION:In this step we choose the lowest quotation, on which we

raise the PO (Purchase Order) to Purchase the assets.

RECEIVE THE ITEM/INSTALL:In this step, after issuing the purchase order the asset is being

received by the company from the supplier or if it is machinery then it

need to be installed.

ONCE COMMISSIONED THEN CAPITALIZED:In this step, after when the machinery is installed or any other

assets is being purchased and that asset or machinery is ready to use.

Then we say, that asset is being capitalized.

CHARGE DEPRECIATION:This is the last step, in this we start charging depreciation on

assets. This depreciation is charged by 2 methods.

1.Straight line method

2.Written down value method

But, NMC uses the written down value method on

their assets.


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ANALYSIS &PRESENTATION OF DATA AND INTERPRETATION

ANALYSIS FORACCOUNTS PAYABLE:

DEBT TO ASSET RATIO

Explanation of Debt to Asset Ratio:

The Debt to Asset Ratio measures the percentage of the company's Total

Assets that are financed with debt (Total Liabilities). This ratio basically

looks at what debt the company owes, and compares that debt to what

assets the company owns.

Importance of Debt to Asset Ratio:

The lower the Debt to Asset Ratio, the better, as companies with high

amounts of debt introduce more risk. You certainly want to look very

hard at companies that have more Total Liabilities than Total Assets, as

this is a precarious position for a company to be in.

Depending on the industry of the company, you might expect the

company to have two or three times as many assets as liabilities.

Anything less than this might be a signal that the company is running

into trouble.

Debt to Asset Ratio Formula:
http://www.spireframe.com/define/financial-statement-term/total-assetshttp://www.spireframe.com/define/financial-statement-term/total-assetshttp://www.spireframe.com/define/financial-statement-term/total-liabilitieshttp://www.spireframe.com/define/financial-statement-term/total-liabilitieshttp://www.spireframe.com/define/financial-statement-term/total-assetshttp://www.spireframe.com/define/financial-statement-term/total-assetshttp://www.spireframe.com/define/financial-statement-term/total-liabilitieshttp://www.spireframe.com/define/financial-statement-term/total-liabilitieshttp://www.spireframe.com/define/financial-statement-term/total-assetshttp://www.spireframe.com/define/financial-statement-term/total-assets


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Debt to Asset ratio =

Interpreting the Calculator Results:

I f Debt to Asset Ratio increases over time:

An increasing Debt to Asset Ratio means the amount of debt the

company has compared to its assets is increasing, which can be a bad

sign.

I f Debt to Asset Ratio decreases over time:

A decreasing Debt to Asset Ratio means the amount of debt the

company has compared to its assets is shrinking, which is generally a

good sign.

I f Debt to Asset Ratio stays the same over time:

An unchanged Debt to Asset Ratio means the amount of debt the

company has compared to its assets has remained the same.

Debt to Asset Ratio Calculation:

Debt to Asset ratio=

Debt to Asset ratio 2009 =

= 76.35


= 75.36


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= 71.75%

Interpretation:

As in the above graph, in 2009 the Debt to Assets Ratio is 76.35

which come down to 71.75 in 2011. This shows a decline in Debt to

Assets Ratio, which is a good sign for a company, because as decreasing

Debt to Asset Ratio means the amount of debt the company has

compared to its assets is shrinking, which is generally a good sign.

ACCOUNTS PAYABLE TURNOVERRATIO:

The accounts payable turnover ratio indicates how many times a

company pays off its suppliers during an accounting period. It measureshow a company manages paying its own bills. A higher ratio is generally

more favorable as payables are being paid more quickly. When placed

on a trend graph accounts payable turnover analysis becomes simplified:

the line raises and lowers just as the ratio does. Common adaptations

used to calculate accounts payable turnover yield results like accounts

69

70

71

72

73

74

75

76

77

2009 2010 2011

Debt to Assets Ratio

Debt to Assets Ratio


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payable turnover ratio in days, Accounts Payable turnover in days, and

more. A useful tool in managing and measuring the efficiency of paying

bills is a Flash Report.

ACCOUNTS PAYABLE TURNOVERRATIO FORMULA:

A solid grasp of the accounts payable turnover ratio formula is of utmost

importance to any business person. Though some ratios may or may not

apply to different business models everyone has bills to pay. The need to

understand Accounts Payable turnover is universal.

Accounts payable turnover = Cost of goods sold / Average accounts

payable

Or = Credit purchases / average accounts payable.

Purchases = Cost of goods sold + ending inventory - beginning

inventory.

ACCOUNTS PAYABLE TURNOVERCALCULATION:

Accounts payable turnover is calculated by dividing total purchases

made from suppliers by the average accounts payable amount during the

same period.Average Accounts payable is the average of the opening and closing

balances for Accounts payable.In real life, sometimes it is hard to get the number of how much of the

purchases were made on credit. Investors can assume that all purchases

are credit purchase as a shortcut. When this is done, it is important to

remain consistent if the ratio is compared to that of other companies.
http://www.strategiccfo.com/infostore/spreadsheet.asp?id=11&tool=true&sid=14http://www.strategiccfo.com/infostore/spreadsheet.asp?id=11&tool=true&sid=14http://www.strategiccfo.com/infostore/spreadsheet.asp?id=11&tool=true&sid=14http://www.strategiccfo.com/infostore/spreadsheet.asp?id=11&tool=true&sid=14


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Average Accounts Payable =51488

Cost of Goods Sold= Opening inventory + PurchasesClosing

Inventory

Cogs = 48798 + 103700054178

= 1031620

Accounts payable turnover ratio =

Accounts payable turnover ratio = 20.1times

Account payable Turnover Days =

Account payable Turnover Days = 18 Days.

INTERPRETATION:

This ratio represents how much time a company takes to pay off its

suppliers. According to this ratio, NMC takes 18 days to pay off itssuppliers. This shows a good sign for the company as they pay off their

supplier this quickly.


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ANALYSIS FORFIXED ASSETS:

The analysis returns on fixed assets of National Medical Centre (NMC)

is studied with the help of Ratio Analysis.

RATIO ANALYSIS:

Ratio analysis is a powerful tool of financial analysis. A ratio

is defined as the indicated quotient of two mathematical expressionsand as the relationship between forevaluating the financial position and

performance of a firm. The absolute accounting figure reported in

financial statement do not provide a meaningful understanding of the of

the performance and financial position of a firm. An accounting figure

conveys meaning when it is related to some other relevant information.

Ratios help to summarize large quantities of financial data and to make

qualitativejudgment about the firms financial performance.

FIXED ASSETS TO NET WORTH RATIO:

This ratio establishes the relationship between Fixed Assets and Net

worth

Net worth = Share Capital + Reserves & Surplus + Retained Earnings.

Fixed Assets or Net Worth Ratio =

100

This ratio of Fixed Assets to Net worth indicates the extent to which

shareholder funds are sunk into the fixed assets. Generally, the purchase


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of fixed assets should be financed by shareholders, equity including

reserves & surpluses and retained earnings. If the ratio is less than 100%

it implies that owners funds are more than total Fixed Assets and a part

of the working capital is provided by the shareholders.

When the ratio is more than 100% it implies that owners funds are notsufficient to finance the fixed assets and the finance has to depend upon

outsiders to finance the fixed assets. There is no rule of thumb to

interpret this ratio but 60% to 65% is considered to be satisfactory ratio

in case of industrial undertaking.

Long Term Debt to Total Asset Ratio:

Def in iti on of Long Term Debt to Total Asset Ratio

Long Term Debt to Total Asset Ratio is the ratio that represents the

financial position of the company and the companys ability to meet all

its financial requirements. It shows the percentage of a companys assets

that are financed with loans and other financial obligations that last over

a year. As this ratio is calculated yearly, decrease in the ratio would

denote that the company is fairing well, and is less dependents on debts

for their business needs.

Formula for Long Term Debt to Total Assets Ratio

The formula to ascertain Long Term Debt to Total Assets Ratio is as

follows:

Long Term debt to Total Assets Ratio = Long Term Debt / Total Assets

I nterpretation:

The higher the level of long term debt, the more important it is for a

company to have positive revenue and steady cash flow. It is very

helpful for management to check its debt structure and determine its debt

capacity. It also shows how many assets of your company are finances


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with the help of debts. To calculate long term debt to total assets ratio

you need to add together your current and long term debts and sum up

the current and fixed assets and divide both the total liabilities and the

total asset to get an output in percentage form.

The output is the assets that are financed by the debt financing while theother half is financed by the investors in your firm. Having the long term

debt to total asset ratio as a high percentage should be worrying factor

for the firm and the company should look in to it and determine the

reason of the high percentage and try to minimize it as much as possible.

The high value would mean that your company needs to have a good

cash inflow to meet all the expenses.

Long Term Debt to Total Asset Ratio therefore provides a measurementto the investor regarding the percentage of a companys assets which are

financed with the help of loans or debts for a period lasting over a year.

FIXED ASSETS AS A % TO CURRENT LIABILITIES

The ratio measures the relationship between fixed assets and the funded

debt and is a very useful so the long term erection. The ratio can be

calculated as below

Fixed Assets as a % to Current Liabilities =

GROSS CAPITAL EMPLOYED

The term Gross capital employed usually comprises the total assets,

fixed, as well as current assets used in a business

Gross Capital employed = Fixed Assets + Current Assets
http://www.readyratios.com/reference/accounting/fixed_assets.htmlhttp://www.readyratios.com/reference/accounting/fixed_assets.html


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RETURN ON FIXED ASSETS

RETURN ON FIXED ASSETS=

This ratio is calculated to measure the profit after tax against the amount

invested in total assets to ascertain whether assets are being utilized

properly or not. The higher the ratio the better it is for the concern.


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FIXED ASSETS TO NET WORTH:

The ratio indicates the extent to where shareholders funds are struck in

the fixed assets. The formula to compute fixed assets to net worth is

calculated as follows. Fixed assets (after depreciation) / Net worth.

NET WORTH = Share capital + Reserves & surplus + Retained

Earnings.

If the ratio is less than 100% it implies that owner funds are more thanthe fixed assets and the shareholders and vice-versa provide a part of

working capital.

Fixed Assets or Net Worth Ratio =

100

Year Net Worth GROSS FIXEDASSETS

RATIO IN %

2009 89,865 1,71,165 190.46

2010 1,01,363 1,64,937 162.72

2011 99,287 88,434 89.07


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INTERPRETATION:

The Gross fixed assets to net worth ratio are fluctuating from year to

year. In the year 2009 the gross fixed assets to net worth ratio is 190.46

in the year 2011 the fixed assets to net worth ratio is 89.07 decreased

which shows that the net worth utilization to acquire the fixed assets is

decrease in the year 2011 when compare to 2009. The highest ratio

recorded in 2009 at 190.46 the lowest ratio is recorded at 89.07 years

2011.

Long Term Debt to Total Asset Ratio:

Formula for Long Term Debt to Total Assets Ratio

The formula to ascertain Long Term Debt to Total Assets Ratio is as

follows:

Long Term debt to Total Assets Ratio = Long Term Debt / Total Assets

Long Term Debt to Total Assets Ratio =

190.46

162.72

89.07

0

20

40

60

80

100

120

140

160

180

200

2009 2010 2011

RATIO IN %

RATIO IN %


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= 0.1

I nterpretation:

This means that the company has AED 0.1 as a long term debt for everyDirham it has in assets.

FIXED ASSETS AS A PERCENTAGE CURRENT LIABILITY:

Fixed assets as a % to Current Liabilities = Fixed Assets/ Current

Liabilities

Year Fixed Assets Current

Liabilities

Percentage

2009 171,165 219,820 77.862010 164,937 287,154 57.44

2011 88,434 210,571 42


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I nterpretation:

The ratio was fluctuating trend percentage in review period. Form the

above table it is observed that the ratio was recorded at 77.86 in the

2009and is gradually changing to 42 in 2011, which indicates that the

current funds are used in the fixed assets, which is quite satisfactory.

FIXED ASSETS AS A PERCENTAGE TO TOTAL ASSETS:

Fixed Assets as a % to Total Assets =

Year Net fixed Assets Total Assets Percentage

2009 171,165 384,287 103.8

2010 164,937 417,909 39.46

2011 88,434 355,235 24.89

0

10

20

30

40

50

60

70

80

2009 2010 2011

Percentage, 42

AxisTitle

Year

Percentage


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Interpretation:

From the above table it is examined that Fixed Assets to total assets ratio

is fluctuating trend during the review period of time. During the year

2009 the ratio was recorded at 103.8 % and the year 2011 the ratio

decreased to 24.89.

0

20

40

60

80

100

120

2009 2010 2011

Percentage

Percentage


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FINDING

Finding for Accounts Payable

Companys debt has compared to its assets is shrinking, which is

generally a good sign.

NMC takes 18 days to pay off its suppliers, this shows a good sign

Finding for Fixed Assets


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Regarding the fixed assets to net worth it has observed that it has

been decreased slightly to 89.07.

Regarding the fixed assets it has been observed that the fixed asset

has decreased.

The company has AED 0.1 as a long term debt for every Dirham it

has in assets.

Current funds are used in the fixed assets, which is quite

satisfactory

Regarding the fixed assets as a percentage of current liabilities it isobserved it is decreased over the Years.

Regarding the fixed assets to total assets it has been observed that

there was Decrease.

FROM THE ABOVE STUDY IT CAN BE SAID THAT THE NMC FINANCIALPOSITION ON FIXED ASSETS IS QUITE SATISFACTORY.

SUGGESTIONS &RECOMMENDATIONS:

Suggestion and Recommendation for Accounts Payable are as follow:

The company should adopt the automatic recording of Accounts

payable entries

The company should adopt the decentralized way of recording

Accounts payable entries.


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Suggestions for efficient management of fixed assets of NMC are:

The NMC should follow the NPV method or IRR method both at a

time rather than following only NPV method.

The NMC should analyze and measure a list of projects for

evaluation.

The NMC capital budgeting policies should be achieved in the

forthcoming Years.

NMC must concentrate on other diversification and takeover.

NMC must be expanded with profit making units with low cost.

CONCLUSION:

Conclusion for Accounts Payable:

By using this Account Payable System user can get following items.

Discover the latest timesavers for processing payables

It is more effective internal controls for reducing duplicate

payments, fraud and wasteful spending

Turn your AP department into a profit center!


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Streamline the entire payment process with simple techniques

and dramatically boost your efficiency

Build safety nets into your processing system that guarantee billsget paid on time

Conclusion for Fixed Assets:

After analyzing the financial position of NEW MEDICAL

CENTRE (NMC) and evaluating its fixed assets Management or

capital budgeting techniques in respect of ratio analysis. The

following conclusions are drawn from the project preparation.

The progress of the NMC shows that the company is in good

condition as its Long Term Debt to Total Assets Ratiois quite

satisfactory. The financial position of NMC regarding investment

it has been increasing from 100%.

REFERENCES/BIBLIOGRAPHY

www.wikipedia .com

www.Investopedia.com

http://www.heka-finance.com/

http://www.accountingtools.com

http://www.nmc.ae/
http://www.heka-finance.com/http://www.heka-finance.com/http://www.accountingtools.com/http://www.accountingtools.com/http://www.nmc.ae/http://www.nmc.ae/http://www.nmc.ae/http://www.accountingtools.com/http://www.heka-finance.com/


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project on account payable

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